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COMMUNITY BENEFITS

How Communities Benefit

Tax Sales Help Local & State Governments

Tax sales finance local and state governments services such as fire, police and 911 services, infrastructure needs, and school districts and librarieswhen cashshortfalls occur due to unpaid property taxes. The delinquent property taxaccounts are very real problems for local governments that must provide critical services to their citizens.

It is widely misunderstood that tax lien sales cause property owners to lose their homes to investors. The opposite is true; tax sales actually extend the period for which property owners can save their property. Without tax liensales, local governments would need to charge higher interest rates ondelinquent accounts and move them to foreclosure faster. Instead, throughtax sales the local governments get the cash they need immediately andthere exists a prolonged stay against foreclosure to allow property owners to get caught up.

The reality is that very few occupied homes are lost through tax sales. The cost to redeem the tax liens is low relative to the value of most homes, so lenders often redeem the property or home owners sell before all is lost. The vast majority of properties acquired through tax sales are vacant land, vacant homes, and vacant commercial property. This is another way in which tax sales help communities; investors in tax liens rehabilitate dilapidated properties acquired through tax sales. This stabilizes neighborhoods and strengthens tax rolls.

In summary, tax sales provide interim financing for local governments, extended redemption period for delinquent property owners, and rehabilitate dilapidated properties. The real question is why isn’t every local government selling tax liens?